ETF Talk: Are Chinese Technology Companies Future Asian Tigers?

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

In keeping with last week’s theme of highlighting international technology companies, today’s ETF Talk focuses on China. Indeed, China is the world’s most populous country and its people increasingly have money to spend on the latest smartphones, computers and other devices. U.S. companies such as Apple are placing big bets on the Chinese consumer, but there also are Chinese companies seeking to gain market share. An exchange-traded fund (ETF) which tracks these Chinese technology companies is the Guggenheim China Technology (CQQQ).

Advertisement.

This non-diversified fund seeks investment results which, before fees and expenses, correspond generally to the performance of an index designed to track publically traded technology companies that are based in mainland China, Hong Kong or Macau and are open to foreign investors.

Following a solid 9.25% jump last year, CQQQ has risen 3.14% so far this year. For those of you interested in additional income, this ETF offers a 1.85% dividend yield. However, now may not be the best time to invest in CQQQ: technology stocks usually fall heading into the summer months, and China recently has had a few minor stumbles, such as slowing economic growth. Still, keeping an eye on this fund would be a good idea, both from an educational standpoint, and potentially to buy when CQQQ is ready to rise steadily again.

Advertisement.

Since CQQQ is a technology ETF, the vast majority of its holdings, 85.08%, are in that sector. The fund’s remaining assets are in various sectors that either support or are benefitted by technological infrastructure: utilities, 4.62%; industrials, 4.57%; basic materials, 3.24%; healthcare, 1.60%; and communication services, 0.90%.

Exclusive  Three Virtual Reality Stocks to Buy

The top ten individual companies held by CQQQ make up 59.66% of the fund’s total assets. As an ETF focused on Chinese entities, CQQQ holds several companies not frequently traded on American exchanges. These companies include its top two holdings, Tencent Holdings Ltd., 8.84%; and Lenovo Group, Ltd., 7.67%. The remaining members of this ETF’s top five companies are: NetEase, Inc., 7.46%; Baidu, Inc., 7.18%; and Sina Corporation, 6.26%.

As I wrote earlier, the current economic slowdown in China is among the factors that cause me not to recommend the fund at this time. Rather, let’s monitor CQQQ and not invest hard-earned money in the ETF right now. It could be quite beneficial to keep an eye on this fund, since China has massive potential for continued technological growth.

Meanwhile, if you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to email me by clicking here. You just may see your question answered in a future ETF Talk.

Advertisement.
share on:
share on:

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader
LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader
LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener
LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program
LEARN MORE HERE

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader
LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor
LEARN MORE HERE

George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives.  He’s an established investor, bestselling author, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

Product Details

  • Technology Report
  • Technology Report PRO
  • Moonshots
  • Private Reserve
  • Millionaire Circle
LEARN MORE HERE

DayTradeSPY

DayTradeSPY was founded by head trader Hugh Grossman, a retired internal auditor for a Fortune 500 company. After years of first-hand experience trying out one trading strategy after another, Hugh instead developed his own trading system centered around day trading SPY options. That’s it... Nothing else.

Product Details

  • Trading Room
  • Pick of the Day
  • Inner Circle
  • Online Workshops
LEARN MORE HERE